ERC And The Broker Relationship
Like many business loan brokerage CEOs across the US, Jared Weitz is familiar with the Employee Retention Credit (ERC). His company, United Capital Source (UCS), which in 2021 surpassed $1B in small business financing volume, regularly speaks to thousands of small business owners. Weitz told deBanked that through his own experience most business owners have become sufficiently aware of the ERC as well. That in turn raises the question of what role a company like UCS can play in the ERC process.
“We have a few different referral partners that are lending against those credits,” Weitz said. “And that’s what we’re doing.”
In that regard, UCS is doing what it is already used to doing, connecting the business owner with a compatible source of funding. While other brokers may attempt to generate fees by assisting businesses with filing for the tax credits themselves, Weitz said he prefers to avoid the headache and/or potential liability that can come along with doing that.
“We’re able to get 100% of what a client is owed right up front,” Weitz said. “They can either have an interest-only program or a no-payments program for 12 months, and then after 12 months there would be a factor rate attached to the program that would be paid back weekly.”
UCS earns a commission when a deal goes through but ERC has not by any means become a primary driver of business, according to Weitz. Rather, it’s something that could come up during a customer consultation.
“When we’re peeling back the layers and chatting with the client on why they need funds, if they say ‘well, actually I’m falling short here and I also just filed for [the ERC] and I’m still waiting for that,’ it can be one of the options that we offer them […] and we’ll just see what they qualify for and if they’re interested in it.”
It’s the waiting part that is creating a cottage industry around ERC. Weitz says he hasn’t heard of any business getting an ERC refund in less than 7 or 8 months and he is aware of at least one business that is still waiting for it 2 years later since filing. But just because most businesses are aware of the ERC doesn’t mean they’ve all actively pursued it. On this, UCS simply offers free helpful advice.
“What I would say to them is ‘hey, heads up, you should probably look into this with your local accountant and payroll company, make sure you get your tax attorney or your accounting firm’s attorney involved just to make sure you’re doing it the right way.'”
Putting business owners on that path of pursuit, informing them of its existence and advising them to seek out qualified counsel to assist with it, generates no revenue to UCS, but Weitz thinks it’s important to help business owners in any way possible.
“I think it does build a bridge of trust a bit more between you and your clients because you’re showing them that you’re not solely looking at products that are beneficial to you, and you shouldn’t be doing that anyway,” Weitz said. “But I think when you’re dealing with someone there’s always that thought in their head, right? And so this has helped solidify that you’re not.”Last modified: January 11, 2023
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.